DOJ Intervenes in $50 Million Medicare Fraud Whistleblower Suit

The U.S. Department of Justice intervened in a $50 million Medicare fraud lawsuit filed by a whistleblower against Prime Healthcare Services. The case was filed by a former Prime nurse turned whistleblower, Karin Bernsten. She claims the healthcare system and its CEO encouraged physicians to admit patients for costly hospital stays even though their condition only warranted outpatient therapy. The case was filed under the federal False Claims Act.

Prime Healthcare Services is a multi-billion healthcare services company. It operates multiple hospitals, mostly on the west coast. Karin Bernsten is a nurse by profession, she later served as a quality and risk management director at Prime’s Alvarado Hospital located in San Diego, California.

Bernsten claims that in 2011, Prime CEO Premy Reddy told physicians and administrators during a 2011 meeting to admit more patients even if there was not a medical reason to do so. According to her complaint, Reddy said, “you can always find a reason to make the (emergency room) patient an inpatient .”

He also told doctors to misdiagnose patients so that they qualify for inpatient hospitalization. Common misdiagnoses included malnutrition, acute heart attacks and sepsis.

Doctors were encouraged to admit patients with Medicare or private insurance. What happened if they were insured? According to Bernsten they were pushed out the door as quickly as possible.

Another allegation against Prime includes “upcoding.” By using a fake (and more serious) diagnosis, hospitals may receive more Medicare money. For example, Bernsten says that Reddy instructed Prime physicians and administrators to diagnose heart failure as ‘acute’ rather than ‘chronic’ so that hospitals could receive higher reimbursement amounts.

At one point Reddy allegedly said that by putting patients in hospitals, he received “$3,000 more per case.” She also claims he told doctors at one meeting, “If the patient is elderly, you should add encephalopathy for a higher payment. You are missing some of these elderly patients. But, be careful … I don’t want to go to jail, ha, ha, ha.”

In May, the U.S. Department of Justice intervened in the lawsuit signaling that it believes the claims have merit. In a prepared statement, a Justice Department spokesperson said, “Fraudulent billing practices, such as those alleged in this civil lawsuit, harm taxpayers who fund health care programs, such as Medicare.”

Over hospitalization is a common form of Medicare fraud. A report by the Center for Investigative Reporting previously revealed that the percentage of seniors that were admitted to one facility spiked by 50% after Prime took over the hospital.

We are particularly concerned about this case because the allegations of Medicare fraud and greed go well beyond money. If Bernsten is correct, some Prime physicians over prescribed medications simply to help collect more money from Medicare. That harms patients and may cause needless suffering and side effects. From our own investigations we also know that hospitalizations often increase the chance of infections.

Reading between the lines, it appears that Prime purchases financially strapped hospitals. Once acquired, Reddy tries to increase revenues by overbilling private insurance and Medicare.

In an order signed on May 24th, the judge approved the government’s intervention into the case. Prosecutors must file their own complaint within 30 days. That suggests even more of Prime’s dirty laundry will be soon be aired.

Federal False Claims Act and Medicare Fraud

Bernsten’s complaint was brought under the federal False Claims Act. That laws allows whistleblowers to file claims in the name of the government. The person blowing the whistle – called a “relator” – can earn an award of between 15% and 30% of whatever the government collects. Some people believe that Prime may owe $50 million if the charges are proven.

Medicare fraud whistleblowers are the new American heroes. Their actions help stop fraud, save tax dollars and often eliminate unnecessary pain and suffering. To become a whistleblower, one must have first hand knowledge of fraud involving a government program or funds. Since Medicare is funded with tax dollars, the case qualifies for an award. Many states have their own false claims acts that cover state funded Medicaid.

Interested in learning more? Our whistleblower clients have already received over $100 million in awards. We have the experience to help you collect the maximum award, put a stop to the greed and corruption, and protect you should you become the victim of retaliation.

To learn more, contact attorney Brian Mahany at *protected email* or by phone at (414) 704-6731 (direct). All inquiries kept completely confidential. We handle Medicare fraud cases throughout the United States.